Neutral Citation No. - 2025:AHC:121484 Court No. - 7 Case :- WRIT - C No. - 14639 of 2024 Petitioner :- M/S Bkf Export Private Limited Respondent :- State Of Up And 3 Others Counsel for Petitioner :- Ashish Rai,Om Prakash Rai,Sr. Advocate Counsel for Respondent :- C.S.C. Hon'ble Piyush Agrawal,J. 1. Heard Mr. Uday Karan Saxena, learned Senior Counsel assisted by Mr. Om Prakash Rai for the petitioner and learned Standing Counsel for the State- respondents. 2. By means of present petition, the petitioner is assailing the order dated 6.4.2023 passed by respondent no. 2 and the order dated 22.2.2024 passed by respondent no. 3. 3. Learned counsel for the petitioner submits that the petitioner has purchased an industrial plot after getting due sanction from the NOIDA vide its letter dated 13.9.2022 and in pursuance thereof, a transfer cum sale deed was executed on 15.9.2022 to which the petitioner has paid due stamp duty, but on the basis of ex- parte spot inspection report dated 18.11.2022 the proceedings under Section 47 A of the Stamp Act was initiated holding that the property in question is used for commercial purpose instead of industrial purpose. Thereafter a show cause notice was issued to petitioner to which the petitioner has duly submitted the objection but being not satisfied with the same, the impugned order dated 6.4.2023 has been passed holding deficiency of stamp of Rs. 75,75,250/- together with penalty of Rs. 7,57,525/- and registration charges Rs.15,15,050/- along with interest @1.5 % per month. Against the said order, the petitioner has filed an appeal, which has been dismissed without considering the material on record. Hence the present petition. 4. Learned counsel for the petitioner submits that ex-parte spot inspection report was prepared, which is clear violation of Rule 7 (3) (c) of UP Stamp (Valuation of Property) Rules 1997. The petitioner was neither put to any notice nor he was present at the time of alleged inspection. He further submits that as per the sanction letter of NOIDA, the property in question is an industrial property and neither any change of the nature of the land from industrial to commercial, has been made, nor any material has been brought on record in respect thereof by the State, therefore, in the absence any material, the proceedings initiated against the petitioner itself is bad. 5. In support of his submissions, he has placed reliance on the judgements of this Court in Jagroop Singh Vs. State of U.P. & 2 Others [Writ C No. 20752/2015 decided on 15.07.2024], and M/s Indo Continental Hotels and Resorts Pvt. Ltd. Vs. State of UP and others (Neutral Citation No. 2023:AHC:175077). 6. Per contra, learned ACSC supports the impugned orders and submits that the petitioner's land was having commercial value, which was wrongly described as industrial land, therefore, the proceedings had rightly been initiated against the petitioner. He further submits that at the time of inspection, no industrial activity was found over the property in question and same was found to be as office and the statement of the watchman present at the spot was also taken in which it has been stated that earlier also the property in question was used as office. He submits that once it was found that no industrial activity was being undertaken over the property in question but on the contrary commercial establishment was found, which was also supported by the statement of the watchman, therefore, the proceedings initiated against the petitioner, is justified. He further submits that the petitioner has not brought any material on record to show that the property was used as an industrial purpose, as in the sanction letter of NOIDA, it was specifically provided that within one year, production must be undertaken. He prays for dismissal of the writ petition. 7. After hearing learned counsel for the parties, the Court has perused the record. 8. The record shows that transfer cum sale deed was executed as an industrial plot and due stamp duty was paid thereof but on the basis of spot inspection report dated 18.11.2022, the proceedings under Section 47 A was initiated. The record further shows that compliance of Rule 7(3) (c) of the Rules has not been made at the time of inspection. This Court on various occasions has held that compliance of Rule 7 (3) (c) is mandatory. 9. This Court in Jagroop Singh (supra) has held that in absence of compliance of rule 7(3)(c) of the Rules, the impugned order cannot be justified. The relevant paragraphs are quoted below:- "7. It is admitted that the sale deed of the vacant plot was executed on 20.10.2012 in favour of the petitioner and on the basis of exparte report, the proceedings were initiated against the petitioner and in pursuance thereof notice was issued but the Collector has not visited the site in question in accordance with Rule 7 (3) (c) of the Rules. Even the respondent authority up to the stage of this Court could show any material in order to justify that prior to initiation of the proceedings, Section 7 (3) (c) of the Rules was complied with in letter and spirit. 8. This Court in the case of Ajay Agrawal (supra) has held as under:- 9. Nonetheless, in view of submissions advanced by learned State counsel, the question arising for determination would be whether compliance of Rule 7(3)(c) is required in proceedings under Section 47(A)(1) as well as under section 47 A(3) of the Act? Here it is also relevant to indicate that both the orders impugned in present writ petition are based only on the aforesaid spot inspection report, which admittedly was ex parte in nature. ... 14. It is quite discernible that the starting provision of Rule 7 itself indicates the applicability of the Rule to the extent that on receipt of a reference or where action is proposed to be taken suo motu under section 47 A the Collector shall issue notice to parties to the instrument to show-cause. A reading of the aforesaid provision makes it evident that no distinction whatsoever has been carved out under Rule 7 of the Rules of 1997 with regard to procedure being required to be followed under section 47 A. On the contrary, it specifically indicates that the aforesaid Rule is required to be followed even in case suo motu action is taken under section 47 A of the Act, which in effect pertains to Section 47 A(3) of the Act of 1899 with regard to determination of stamp duty after registration of a document of instrument of transfer. As such no such distinction having been carved out under Rule 7, it is not feasible to accede to the submissions of learned State counsel that Rule 7 (3)(c) of the Rules would not be applicable in case of proceeding under section 47 A( 3) of the Act. ... 20. In view of aforesaid, it is evident that the power to be exercised by Collector under section 47A (3) of the Act is not pedantic in nature but is required to be made on the basis of observations made hereinabove particularly with regard to the fact that he is required to apply his mind and record subjective satisfaction not only with regard to under valuation of the instrument of transfer but also to record a separate satisfaction regarding market value of the property and the duty payable thereupon and cannot place reliance only on the spot inspection report. …. 22. Upon applicability of aforesaid in the present case, it is evident from a reading of the impugned orders that the same are based only on the spot inspection report and no subjective satisfaction at all has been recorded by the authority either under section 47 A or under section 56 of the Act as required to be done as per observation is made hereinabove. 9. Again this Court in the case of Satendra and another (supra) has held as under:- 11. On a pointed query being made to the learned Standing Counsel as to whether there was any further inquiry after the inquiry was initially held in the form of spot inspection, learned Standing Counsel could not point out either from the record or pleadings of the counter affidavit that any further inquiry was held as contemplated under the Rule 7 of the Rules. 12. This Court notices that after the notices were issued and the Collector had fixed date inviting objections, the Collector failed to fix any further date for spot inspection or for any further oral or documentary evidence and therefore, it cannot be said that the Collector at all undertook any effort to act in accordance with the procedure prescribed in the matter. The conclusion drawn therefore, is devoid of any cogent and convincing material in support there of and the findings therefore, are liable to be held as perverse. The said rule which has been quoted herein above, has also drawn attention of Full Bench in Smt. Pushpa Sarin v. State of U.P. 2015 (127) RD 855. However, the Full Bench did not delve into the issue any further regarding the scope and applicability of the Rules because the period which was in dispute under the reference was prior to the rule coming into force. Para 18 of the judgment of Full Bench runs as under: "18. Subsequently, the provisions of the Stamp Rules in regard to valuation were replaced by the Uttar Pradesh Stamp (Valuation of Property) Rules, 1997 which have been made in exercise of the powers conferred by sections 27, 47-A and 75 of the Stamp Act. However, it is not necessary for the Court to express any view on the scheme or provisions of those rules since the period of dispute in the present reference is prior to the enforcement of those rules." 10. In view of above, the writ petition is allowed. The impugned orders dated 23.2.2015 and 20.8.2013 are hereby quashed." 10. Further the land use of the property in question is industrial but no material has been brought on record to show or suggest that land use of the property in question has been changed from industrial to commercial. Once land use has not been changed, the authorities cannot be justified in holding that the property in question will be used as commercial other than the use mentioned in the transfer cum sale deed. 11. Further this Court in the case of M/s Indo Continental Hotels (supra) has held as under: 22. In view of aforesaid law laid down, it is clear that deficiency of stamp can neither be determined on the value of future use of the property nor it can be levied on the ground that property can fetch good market value nor in the absence of any declaration made by the State Government changing the nature of the land from industrial to commercial. The judgement referred by the counsel for the petitioner clearly indicates for determination the stamp duty only on the date of execution of deed. 12. In view of the facts and circumstances of the case as well as the law laid down by this Court, as referred herein above, the impugned orders dated 6.4.2023 and 22.2.2024 cannot be sustained in the eyes of law and same are hereby quashed. 13. The writ petition succeeds and is allowed. 14. The authority concerned is directed to refund any amount deposited by the petitioner along with interest @ 4% per annum from the date of its deposit till the date of refund, within a period of one month from the date of production of a certified copy of this order. Order Date :- 24.7.2025 Rahul Dwivedi/- Digitally signed by :- RAHUL DWIVEDI High Court of Judicature at Allahabad